July 24, 2014 / 6:36 AM / 5 years ago

UPDATE 2-Dubai telco du expects network sharing deal before yr-end

* Services to include VOIP, broadband, others later

* Trims 2014 revenue growth to 8-10 pct from double-digits

* Q2 net profit 547.7 mln dhs vs 473.9 mln dhs yr-ago

* Proposes 0.12 dhs for H1 dividend (H1 2013 = 0.22 dhs) (Recasts, adds call details, context, share price)

By Nadia Saleem

DUBAI, July 24 (Reuters) - Du, the United Arab Emirates’ second biggest telecoms operator, expects to offer Internet-based phone calls and broadband services across the country before the year-end in a network sharing deal with rival Etisalat that has been in the works since 2009.

This network sharing agreement is an important step for du, which ended Etisalat’s domestic telecoms monopoly in 2007, but which has since been limited to newer areas of Dubai, constraining its ability to grow.

Du chief executive Osman Sultan told a media call on Thursday UAE customers can expect to have the option to switch between operators for some services before the end of the year.

Initially, services will include voice over internet protocol (VoIP) and broadband, while television streamed over the internet (IPTV) will be added later, he said.

“In the fixed segment, competition did not play yet so strategically, going forward, this will be a very interesting platform of (revenue) growth for us,” Sultan said.

He said estimates on revenue impact would be disclosed in coming quarters, although the feed-through was unlikely to be strong in the initial phase before ramping up later.

The federal-run Emirates Investment Authority owns about 40 percent of du and around 60 percent of Etisalat.

Analysts have said the government holdings in both companies is one reason for the slow progress towards opening up the market to more competition. The government receives dividends from the two groups.

Reuters reported in May that Etisalat expected to conclude the network sharing deal before the end of 2014.


Sultan also said he expects du’s 2014 revenue growth to be between 8 and 10 percent, marginally lower than projections given earlier this year of double-digit growth.

du reported a 15.6 percent increase in second-quarter profit to 547.7 million dirhams. This beat the 498.8 million dirham average estimate of analyst polled by Reuters, with du attributing the growth to increased revenue from fixed and mobile services.

Second-quarter revenue was 3.02 billion dirhams, rising 13.7 percent on the same period a year ago, with fixed-line revenue and mobile revenue up 30 percent and 10 percent respectively.

Average revenue per user (ARPU) - a key industry metric - was 103 dirhams in the second-quarter, Sultan said on the call, up from 100 dirhams in the first quarter.

Du’s active subscribers grew 7.6 percent year-on-year to 7.2 million, although the figure dipped 5.2 percent from the first quarter of 2014 as a local government initiative requiring all mobile users to register their numbers saw 468,000 phone numbers withdrawn from service.

The company, which has a 46 percent share of the UAE mobile phone market, warned further reductions could be possible in coming quarters. Etisalat had around an 86 percent market share of fixed-line business at the end of 2013.

du’s board recommended paying a cash dividend of 0.12 dirhams per share for the first half of 2014. This is lower than a special one-off 0.22 dirhams per share paid in the year-earlier period, according to Thomson Reuters data.

Shares in du closed down 0.17 percent at 5.84 dirhams on Thursday. ($1 = 3.6730 United Arab Emirates Dirhams) (Additional Reporting by Archana Narayanan; Editing by David French and Jane Merriman)

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